Kolkata, Jan 21 (IANS): Kolkata based multi-vertical major ITC Ltd. Wednesday said its net profit in the quarter ending December grew 10.4 percent year-on-year to Rs.2,635 crore as revenues from cigarettes weakened.

The net profit for the same period in the previous fiscal year stood at Rs.2,385 crore.

Net sales during the period rose by 2.05 percent to Rs.8,800 crore against Rs.8,623 crore in the third quarter of the previous fiscal.

According to a statement from the company, the muted growth in FMCG-cigarettes segment revenue and profit was due to steep increase in excise duty and VAT.

"The full impact of the steep hike in excise duty on cigarettes announced in the Union Budget 2014 and sharp increases in VAT on cigarettes by Tamil Nadu, Kerala and Assam effected during the quarter. Cigarette revenues, as a consequence, remained flattish during the quarter compared to the same period last year," the company said in a statement.

Cigarettes registered only negligible growth of 0.63 percent, but continued to remain the majority revenue earner with 47 percent share of Rs. 4,142 crore and around 76 percent to the profit before tax. It is, however, sequentially down by 2.56 percent.

The low growth in cigarettes also impacted its other business verticals, primarily the paper and packaging segment as its revenues in this segment declined by 4.6 percent to Rs.1,199 crore compared to Rs.1,257 in the last fiscal.